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Carter v New Tel Ltd (in liq)

Carter v New Tel Ltd (in liq)

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Case Copied 7 March 2003 13 min read

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Reported Decision:
(2003) 44 ACSR 661

Supreme Court

CITATION: Carter v New Tel [2003] NSWSC 128

HEARING DATE(S): 3 March 2003

JUDGMENT DATE:
7 March 2003

JURISDICTION:
Equity

JUDGMENT OF: Austin J

DECISION: Winding up order made

CATCHWORDS: CORPORATIONS - winding up - application by liquidators of company in voluntary winding up for winding up by the Court - effect of ss 468 and 588FJ - possible effects of directors' and officers' insurance policy - whether grounds sufficient to justify winding up by Court

LEGISLATION CITED: Corporations Act 2001 (Cth) ss 9, 459A, 459P, 461, 462, 468, 513A, 513B, 513C, 588FJ

CASES CITED: ERS Engines Pty Ltd v Wilson (1994) 35 NSWLR 193
Re Wilkcorp Pty Ltd (Supreme Court of Queensland, Derrington J, 30 June 1997, unreported)

PARTIES :
Phillip Patrick Carter and Gregory Winfield Hall in their capacity as liquidators of New Tel Ltd (In liquidation) (P)
New Tel Ltd (In liquidation) (D)

FILE NUMBER(S): SC 1577/03

COUNSEL: B Coles QC (P)
L Powers (Solicitor) (Optus Mobile Pty Ltd & RSL Com Mobile Pty Ltd)

SOLICITORS: Blake Dawson Waldron (P)
Minter Ellison (Optus Mobile Pty Ltd & RSL Com Mobile Pty Ltd)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

FRIDAY 7 MARCH 2003

1577/03 PHILLIP PATRICK CARTER AND GREGORY WINFIELD HALL IN THEIR CAPACITY AS LIQUIDATORS OF NEW TEL LTD (IN LIQUIDATION)

JUDGMENT

1 HIS HONOUR: New Tel Limited was a listed Australian public company. It went into liquidation after a period of voluntary administration. The plaintiffs, Mr Carter and Mr Hall, were appointed administrators on 10 December 2002. They reported to creditors under s 439A on 2 January 2003. They recommended, in their report, that as no viable proposal for a deed of company arrangement had come forward, the company should be placed into liquidation without delay. When a broad proposal for a deed of company arrangement was received shortly before the meeting, they issued a supplementary report affirming their opinion. The creditors followed the plaintiffs' recommendation, resolving on 13 February 2003 that the company be wound up. A winding up in these circumstances is deemed to be a creditors' voluntary winding up by reason of s 446A(2).

2 On 3 March 2003 Mr Carter and Mr Hall made an application in the Corporations List for an order of the Court that New Tel be wound up in insolvency. They advanced three reasons for the Court to make this order. I was persuaded by those reasons and made the order, reserving my reasons for judgment.

3 Before explaining the three reasons that persuaded me to convert the voluntary winding up into a Court-ordered winding up in insolvency, I should comment briefly on some aspects of the winding up order that I made on 3 March 2003. The Corporations Act distinguishes between winding up by the Court (dealt with in Parts 5.4, 5.4A and 5.4B), and voluntary winding up (dealt with in Part 5.5). Winding up by the Court is further subdivided into winding…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2003] NSWSC 128
Decision Date: 7 March 2003

CaseChat Overview and Summary

The matter involved an application by the liquidators of New Tel Ltd, a company in voluntary liquidation, for an order that the company be wound up by the Court. The basis of the application was the inability of the company to pay its debts. The liquidators also sought an order that certain insurance policies held by directors of the company be assigned to them. The company's directors opposed the application. The Court was required to determine whether the grounds were sufficient to justify winding up the company by the Court and whether the insurance policies should be assigned to the liquidators.

The Court considered the legal framework governing the winding up of companies and the circumstances in which a Court-ordered winding up was appropriate. It examined the provisions of ss 468 and 588FJ of the Corporations Act 2001 (Cth), which provide for winding up by the Court and the availability of insurance policies held by directors. The Court also considered the effect of the insurance policies on the company's ability to pay its debts and the potential impact on creditors. The Court found that the liquidators had established sufficient grounds for a Court-ordered winding up and that the insurance policies should be assigned to them.

The Court held that the liquidators had established sufficient grounds for the Court to order a winding up of the company. The Court found that the company was unable to pay its debts and that there were compelling reasons for the Court to intervene. The Court also found that the insurance policies held by the directors should be assigned to the liquidators to ensure that the proceeds were available to meet the company's debts. The Court noted that the insurance policies could provide significant benefits to creditors and that it was appropriate for the liquidators to have access to them.

The Court ordered that New Tel Ltd be wound up by the Court and that the liquidators be appointed as the liquidators. The Court also ordered that certain insurance policies held by the directors be assigned to the liquidators. The Court made no orders as to costs.

Orders